Forex Videos

Archives

Currency Trading Chart Types And Uses

November 19, 2014 at 13:46by K. Prabhu

The currency trading chart is one of the most important tools for the Forex trader. Charts are the basics of technical analysis which forms trading systems based on studying price movements rather than economic indicators which are the basics of Fundamental analysis. Most traders these days prefer technical analysis which does not require any special knowledge. Any currency trading chart will show price movements. You can look at last few minutes, hours or days of price movements along with technical indicators will provide emerging tendencies and trends that can signal a trading opportunituy.
Forex charts come in 3 formats.
1. Line chart
THese are joined with a line to show the direction of movement however line chart do not give much information other than closing price.
2. Bar chart
A Bar chart gives you 4 prices for each period, open, high, low and close price. This chart is slightly better than the line chart that it gives you the picture of price fluctuations and volatility over a period of time.
3. Candlestick chart
If shown in black and white you will see black for a falling price and white for a rising price. The colors give you an instant view of whether prices rose or fell during the period. This makes candlestick chart quicker to glance through than a bar chart. You can easily identify trends and trend reversals and hence many traders prefer candlestick charts than the other two types of charts.